David’s Bridal files bankruptcy again, lines up $85 million DIP loan

By Sarah Lizee

Olympia, Wash., April 17 – David's Bridal, LLC and some of its subsidiaries filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of New Jersey.

David’s Bridal expects to file a recognition proceeding in Canada, and a subsidiary plans to start an administration proceeding for its business in the United Kingdom.

This is the second time the company has filed Chapter 11 bankruptcy. The company made a pre-packaged filing on Nov. 19, 2018 and emerged on Jan. 18, 2019.

The company said in court documents that while the restructuring achieved in the prior Chapter 11 case deleveraged the debtors’ balance sheet by about $434 million, the company maintained a large store footprint and substantial operating expenses following its emergence.

Given David’s Bridal’s sizable store portfolio, with 294 stores across the United States, Canada and the United Kingdom, inflationary pressures, which have led to higher inventory and operating costs, have significantly impacted revenue, the company said.

David’s Bridal currently has about $256.9 million of total funded debt outstanding, including $35.5 million in asset-based lending revolving loans due May 2024, $10.1 million in ABL first-in, last-out term loans due May 2024, $91.7 million in senior super-priority term loans due May 2024, $29.3 million in super-priority term loans due December 2024, $74.9 million in first-lien term loans due June 2023 or December 2024, and $12.4 million in takeback term loans due January 2024 or December 2024.

Bank of America is agent on the ABL facilities, Alter Domus (US) LLC is agent on the senior super-priority loans, and Cantor Fitzgerald Securities is agent on the super-priority loans, first-lien term loans and takeback term loans.

DIP financing

The company has lined up an $85 million senior secured super-priority facility, consisting of $75 million in revolving commitments and $10 million in FILO term loan commitments provided by Bank of America and 1903P Loan Agent, LLC, respectively. David’s Bridal is seeking interim approval to access the $10 million FILO term loan.

The DIP facility contains a creeping rollup of prepetition ABL debt through the entry of the final order, at which time all remaining prepetition ABL debt will convert to DIP loans.

The DIP facility will mature on Aug. 31, subject to an earlier maturity following certain events.

Interest on DIP revolving loans is the base rate plus 325 basis points, payable in cash. Interest on the DIP FILO loans is the base rate plus 1,250 bps, or SOFR plus 1,350 bps, in each case payable in-kind.

The company is also seeking court approval to access the cash collateral of its prepetition secured lenders.

Sale plans

In light of liquidity constraints, the company was unable to finalize a prepetition marketing and sale process out of court and intends to continue exploring a sale of all or some of its assets during the Chapter 11 process.

The company said it is also strategically managing inventory and evaluating its physical footprint to maximize value and the prospect of a successful going-concern transaction.

According to a bid procedures motion filed with the court, the company is proposing a bid deadline of 5 p.m. ET on May 30, a June 1 auction, and a June 5 sale hearing.

The company is also seeking approval to choose a stalking horse bidder and provide an up to 3% breakup fee and an expense reimbursement.

Other details

The company is seeking customary first-day relief from the court, including authorization to continue payment of employee wages and benefits, maintain certain customer programs, and honor obligations to critical vendors.

In its petition, the company listed 25,001 to 50,000 creditors, $100 million to $500 million in assets and $100 million to $500 million in liabilities.

Its largest unsecured creditor is United Parcel Service (UPS), based in Philadelphia, with a $1.3 million trade claim. No other creditors were listed with unsecured claims of $1 million or more.

Kirkland & Ellis LLP and Cole Schotz PC are serving as legal counsel, Houlihan Lokey Capital, Inc. is serving as investment banker, BRG is serving as financial and restructuring adviser and Osler, Hoskin & Harcourt LLP is serving as Canadian legal counsel.

The company has retained Gordon Brothers to assist with inventory sales.

David’s Bridal is a Conshohocken, Pa.-based bridal retailer. It filed Chapter 11 bankruptcy for the second time under case number 23-13131. The first Chapter 11 filing was under case number 18-12635.

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